PM pitches for reforms, more FDI

Prime Minister Manmohan Singh on Sunday made a strong pitch for more foreign direct investment (FDI) inflows into the country and said the government would go ahead with economic reforms.

The Prime Minister, addressing over 600 foreign delegates attending the Indian economic summit, said, "As foreign investors, you are welcome to participate in all our efforts."

"Our FDI policy has been greatly liberalised. FDI has been freely allowed in more and more areas under the automatic route, and now it covers a number of sectors in agro-processing, nearly all areas of industry and services as well,'' Singh added.

He said the government would push further the financial sector reforms and build a political consensus for introducing legislative changes, especially in the insurance sector.

Foreign investors are keen to invest in this segment. "We are better placed than any time in the recent past to push the reform process forward,'' he pointed out.

The three-day economic summit has been organised by the World Economic Forum and the Confederation of Indian Industry (CII). The Prime Minister said although the cumulative FDI inflow amounts to over $ 120 billion since 2001-02, this is not a large enough number given the scale of the Indian economy.

Singh told the delegates, "In addition to FDI, we welcome portfolio investment in equity in Indian companies by qualified institutional investors.'' "Our policy will be guided by the desire to make India an even more attractive destination for FDIs. We are particularly keen to rationalise and simplify procedures to create an investor-friendly environment,'' Singh observed.

The Prime Minister said the government would strengthen the country's financial system in various ways.

"We need to ensure that the financial system can provide the finance needed for our development, especially infrastructure development. This opens up a broad agenda for reform,'' he explained.

Singh said the country needs to develop long-term debt markets and to deepen corporate bond markets, which in turn calls for strong insurance and pension sub-sectors. He added there is a need to improve the futures markets for better price discovery and regulation."All these issues will be addressed through gradual but steady progress in financial sector reforms to make the sector more competitive while ensuring an efficient regulatory and oversight system,'' he observed.

He also said, "We now hope to see faster progress in sale of a portion of government shareholding in the domestic market and issue of fresh equities in respect of the selected companies in the public sector.'' The stimulus package, which the government resorted to for managing the downturn in the wake of the global crisis, has been vindicated and appropriate action would be taken next year to wind this down to reduce the fiscal deficit, he added. "The economy is expected to post a seven per cent growth during 2010-11.

Our objective is to achieve a growth of nine per cent per annum," he said. "Our strategy is to aim at sustaining a high rate of growth through a large increase in investment in high-quality infrastructure.'' Singh said India has an ambitious programme of investment in all the key infrastructure sectors - power, roads, ports, airports, telecommunications, irrigation and urban infrastructure.

The Prime Minister said private investment has a large role to play in achieving this target and private-public partnership strategy had been adopted in many areas.

As part of its inclusive growth strategy, the Centre would expand investment in health and education, including skill upgradation of the workforce on a massive scale. Environmental sustainability is also an important objective and India has prepared a national action plan on climate change. However, the developed countries will have to keep in mind that India is not responsible for the high level of carbon emissions in the world.

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